Digital Transformation. Who should lead it?

I cannot think of a single exception to this general rule: an organisation must innovate or die, and innovation will likely involve Digital Transformation.

If you’re in a start-up environment, innovation is your bread-and-butter — no need to read on. For pre-Internet organisations, typically run by people of a very different generation and mind-set, Digital Transformation is often a mystery. And, due to its cross-cutting nature, is an activity fraught with many challenges.

The Digital Transformation Agenda

Digital Transformation is an agenda that seeks to deliver business benefit:

Reduce cost of sale (pain killer)

Reduce operational over-heads (pain killer)

Reduce friction; easier to do business (pain killer)

Increase conversion rates (vitamin)

Increase customer loyalty / net promoter scores (vitamin)

Increase talent attraction and retention (pain killer / vitamin)

Narrows the gap between Customer Preferences and Offerings (vitamin)

There’s nothing unusual about this list, apart from one issue: who owns the Digital Transformation agenda? Traditionally, this list of ambitions would be divided across an organisations’ functions. Directorates would normally devise and execute plans in silos, and at the end of the year, an estimation of success would be made at team, group and company levels. I say estimation because, likely, there were no set targets, and not a whiff of ROI!

Would you rather suffer than change?

The Digital Transformation agenda requires vision, deep understanding of technology, business insight and leadership. In my experience, this is where the wheels come off: leadership.

Often, the first step to introducing far-reaching change is to create a steering committee and “let’s do a survey”. And the problem with that? It’s a great way to protract any process, and to distribute, and thus destroy any sense of accountability. And, because the real know-how is hushed to a level below the leadership group, technical challenges are poorly understood, and the art-of-the-possible is franchised out to external consultants whose opinions are consumed at a rate directly correlated to their fees.

The Digital Transformation agenda will not survive an Old Normal management approach. Consensus has to give way to vision, which requires turf to be surrendered, co-operation with rivals, and a realisation that seniority alone doesn’t entitle the trumping of subject matter specialists.

So, who should lead the Digital Transformation agenda? CTO? CIO? CDO? CMO? CFO? I wouldn’t pick the candidate by title. You’ll need someone who’s comfortable talking to technologists — natively. And the candidate must be oriented to delivering Business Benefits and ultimately, the organisation’s promise. Not Projects.

If you select your Digital Leader using Old Normal methods, you have chosen suffering over change. Choose someone capable of delivering a Digital Vision and its promises, and you have opted for a course of pain-killers and vitamins.

Should Old Normal IT be charged with Digital Transformation?

I have used this excellent blog post by @cagan to create this list. In it I wanted to characterise the difference in approach between IT and Digital teams. The original blog post compared IT approaches with Digital Products organisations. In my version, IT and Digital co-exist in an organisation. IT serving the needs of the business, Digital, the needs of customers, channels and partners. In this case, a Digital Product is a derivitive of the Digital Transformation agenda. Some organisations conflate the purposes IT and Digital and even consider adding Digital to the IT portfolio. That said, it’s not always this way. UK Parliament for example has an IT team that’s Digital, Agile, and open. So, please forgive the generalisation.

1) Purpose

In an IT mindset organisation, the staff exists to service the perceived technology needs of “the business.”

In a Digital organisation, the staff exists to service the needs of your customers, within the constraints of the business. This is a profound and far-reaching difference. Most of what is below stems from this difference.

2) Passion

In an IT mindset organisation, product and tech are mercenaries. There is little to no product passion. They are there to build whatever.

In a Digital organisation, product and tech are missionaries. They have joined the organisation because they care about the mission and helping customers solve real problems.

3) Requirements

In an IT mindset organization, requirements are “gathered” from stakeholders, prioritized in the form of roadmaps, and implemented. IT mindset methods are simply too slow, too expensive and generate far too much waste.

In a Digital organisation, we must discover the necessary product to be built. Moreover, we know that most ideas will not work with customers the way we might hope, and we also know that those that do work will require several iterations to achieve the necessary business results.

4) Staffing

The IT mindset shows up very visibly in the staff and the roles. The lack of true product managers, the lack of true interaction designers, the prevalence of old-style project management, engineers unfamiliar with the demands of scale and performance, the existence of old-style business analysts, and heavy use of outsourcing, are all clear examples of this.

In IT mindset companies you find them still funding projects (output). There are many serious problems with this antiquated model, and it generates all kinds of bad behavior in the organization as they try to work around the constraints of this system, but most importantly, it results in very poor ROI for the company because of the very high cost of finding out which ideas work and which don’t.

In a Digital organisation, product teams are measured by business results (outcome).

6) Process

In IT mindset companies, you usually find very slow, heavy, Waterfall processes, even when the engineers consider themselves Agile. The only part that would be considered Agile would be at the tail end of build, test and release. Much of this stems from the Funding issue above, but deciding what areas to invest in, staffing a team, defining and designing the solution, and release planning are all typically very Waterfall.

A Digital organisation moves much faster, and works differently, in order to deliver the necessary solutions for our customers and our business.

7) Silos

In IT mindset companies, people align by function, creating silos between the different areas of the business, product, user experience design, engineering, QA and site operations.

A Digital organisation depends on collaboration between product, user experience, technology and the business units. In a Digital organisation we optimise for product teams, not for the individual functions.

8) Organisation

In IT mindset companies, engineering is often under a CIO, and “product” (if it exists at all) is often under marketing or absorbed directly in the business units themselves.

In Digital organisations, there’s a big difference between the engineers that support “true IT” and those that work on products.

The Products of a Digital Transformation are not a sub-function of marketing. Products are a top-level activity on par with marketing and technology. It is not so much the org chart that matters here, as much as a recognition that the way we manage True IT work is very different than how we manage Digital Transformation.

9) Accountability

In IT mindset companies, accountability frankly is a farce. The people actually working on a project typically have no real say in what they are building, and sometimes even in how it’s built, and even when it’s due. In theory, the leadership team could try to hold the requesting stakeholders accountable for the results, but if they do they immediately hear complaints that they didn’t get what they actually wanted, and because of delays and costs, critical things had to get cut, and so it’s certainly not their fault. So management writes it off as yet another failed technology initiative.

A Digital organisation measures its Digital Transformation agenda by results.

10) Leadership

In IT mindset companies, the technology is viewed as a necessary evil. It is a source of fear more than a source of inspiration. Leadership in IT mindset companies is always looking for a silver bullet when it comes to technology. Maybe they should outsource the whole mess? Or maybe they can acquire someone else that hopefully has a better track record than they do.

In a Digital organisation, technology enables and powers the business. It is embraced and valued. The people that create the technology are respected as the key contributors they are. Leadership in a Digital organisation understands that it’s their job to create the culture and environment necessary to nurture continuous innovation.

Conclusion

Would you rather suffer than change? Well, you have little choice if your organisation is to survive. You will probably have to change the way you hire. Change the way you organise — at board level. Perhaps, toughest of all, join your Business and Digital Transformation plans at the highest level in your organisation.